Mayor voices concerns over fund balances

Mayor Mike Fagg voiced questions and concerns on several topics affecting the city during the El Dorado City Commission meeting Wednesday afternoon.

Julie Clements

Mayor Mike Fagg voiced questions and concerns on several topics affecting the city during the El Dorado City Commission meeting Wednesday afternoon.

Among his concerns was an on-going question about the budget the city sends to the state of Kansas.

His concern was because the ending balances from the previous year and the beginning balances from the current year don't match in some of the funds.

Fagg asked for a letter from the auditors stating it is OK if these numbers do not match.

Herb Llewellyn, city manager, said they already did that when they did the audit.

"You want them to do more work?" he asked.

"I don't think they looked at our budget we send to the state," Fagg said.

Llewellyn said Fagg was wrong about that.

Fagg said he wanted a letter stating it is OK to give numbers to the state where the actual cash on Dec. 31 is different than on Jan. 1.

"You asked that number to Tammy (Schaffer, finance director) and she told you there are year-end adjustments each year so that number will change," Llewellyn explained.

"We have most of the year to get those changes done so they are actual numbers when we send it to the state," Fagg replied. "I visited with our auditor and this thing we send to the state, she acted like they don't look at that. That shouldn't be a big job. I think that's wrong in my opinion."

Fagg said he talked to someone in Topeka who also said it should match.

"What I want to hear from our auditor is that's OK with her signature," he said. "I don't think she looks at the budget."

Commissioner Chase Locke asked Fagg if he asked the auditor if she looked at it or he just thought she didn't.

Fagg said he thought she didn't.

"They have unfettered access to everything we do," Llewellyn said, "based on the laws of the state of Kansas and what the Generally Accepted Accounting Procedure are, which change every year, which I think you would know."

"I'm not ready to discuss that part," Fagg said. "I just want the letter."

Commissioner Nick Badwey had concerns about that though.

"I don't see how we ask someone to do that without them going back through everything," he said.

"It's work and it's a bill," added Llewellyn. "They told me you have asked for work and it will cost money. They audit our books and report it to the commission. What you're asking for is them to do additional work."

Fagg reiterated he was just asking for a one-page letter saying the numbers don't have to match.

"The question is does the commission want to do that work," Llewellyn said.

Fagg still was concerned about the differing numbers.

"They've already been adjusted because it's a year old," he said.

Llewellyn said the budget is finalized in June or July of 2013 and the 2012 numbers are done in May or June of 2013.

Commissioner David Chapin explained it further, saying, "When property taxes are collected at the county we have to wait for about $300,000 of uncollected taxes that trickle in three months, six months or a year after that then goes into our books. We're going to have a different number."

Llewellyn said they could post earnings in the wrong year.

Chapin said that would immediately mess up the books.

Fagg responded, "This is a report we send in to the state of Kansas saying in 2012 we have cash on hand in different accounts. When you look at Dec. 31 in prior years, that cash number does not match the 2012 Jan. 1 number."

"I cannot just say that you are right and the auditor is wrong," Chapin said.

He said he would have to look at all of the information Fagg had.

"I can't figure out, are you saying the auditor is wrong?" Locke asked.

"The ending balance and beginning balance on many accounts does not match," Fagg said again. "I want a letter saying it is OK to report these figures in this fashion to the state of Kansas."

Badwey asked if it would cost to ask the auditors if they looked at it.

"If the answer is yes, I'm OK with it," he said. "If the answer is no, then we can talk about it some more."

Fagg said he was OK with that.

"If the numbers can be skewed a little bit, Mike, is it still wrong?" Chapin asked.

Fagg said he did not know the answer to that.

"Is it going to only be right if you think it is right?" Chapin asked. "If everyone else thinks it is right, is it still wrong?"

Fagg said again it was a simple question.

Llewellyn said he would talk to the auditor and bring the information back to the commission.

At this point, Commissioner Bill Young voiced his thoughts.

"As we get our report back from the auditor at the end of every year, they answer the questions we have and report back to us," Young said. "In this year's report we met all the standards of the Generally Accepted Accounting Practices in the state. We abide by all laws. That's what that audit letter read back to us that we are perfectly conforming to the rules of the state of Kansas. I guess the implication here is the auditor didn't look at everything good enough and needs to redo something. Their job is to audit companies and audit government agencies and as they do that they have a process they go through to complete that audit. If we didn't meet those, if we had gaps there, we would know that from the audit."

Fagg said it was a month ago when he talked to the auditor so he couldn't recall all of the details.

"I had questions for her and I had the feeling one of the things they don't look at is what we send to the state of Kansas for a budget," Fagg said.

"Does the city of El Dorado in their accounting practices meet the laws set forth by the state of Kansas when we set a budget?" Young asked. "That is the question. The answer from the auditors should be yes or no and the answer has been yes."

Locke said he also was under the impression the auditors could go through what they needed to.

"I agree with Bill," Locke said.

He thought the concerns should be brought up at the next audit.

"If it's going to require more money, I say it needs more discussion," Locke said.

"To go back now and ask questions about the previous audit process is futile," Young agreed. "Bring it up in the next process. My contention is we've got that letter from them in the audit report. We've got that letter. It's just not phrased the way you want it phrased."

Fagg asked if Young knew that for a fact.

"It's what the letter says," Young responded. "They've done the audit. Their report was in compliance with the laws of Kansas. In short, the city of El Dorado is in compliance with the state of Kansas. Now you are asking for another letter that says that in another phrase. I think it is a waste of the city manager's time and auditor's time."

"I'm saying I don't think they looked at that," Fagg said. "I've talked to her, have you?" he asked Young.

"No, because I'm not authorized to talk to people on behalf of the commission," Young said.

Fagg said he was just asking her to sign a letter, but Young argued the letter has been signed saying they are in compliance.

"I'm telling you that form is wrong in my opinion," Fagg said.

Young asked if Fagg has checked with other cities and if they all zeroed out. If so, then Schaffer or Llewellyn need to make them understand why that is.

"You have been told ending balances get adjusted all the time," Llewellyn said. "This time the mayor is not questioning the audit. He is questioning how we submit the form to the state of Kansas. You've heard these questions before. They've been answered before. Now you're asking again. I have my instruction."

"What is your instruction?" Fagg asked.

Llewellyn said it was to ask if they look at what the city sends to the state.

"And if it is OK if the numbers don't match," added Fagg.

The other commissioners all disagreed with this, voicing they were only asking if they looked at it.

Fagg then asked if the commissioners would have a problem if he had a three-way conversation with Llewellyn and the auditor.

"Yes," Young said. "It is the city manager's job to do our communicating."

County Clerk Don Engels sees a number of budgets, mainly from townships and the county, in his role with the county.

He said it was how a budget should work that the ending and beginning balances should be the same.

"I noticed with the city of El Dorado some did not match," he said, "but I don't know how common it is in city budgets."

He did note some balances that seemed unusual.

"If it looks to be something unusual, I would want to look into it," he said.

Engels has only had the city budgets a couple of weeks, so he has not had a lot of time to look at them yet.

Looking at a possible storm shelter

In another issue, Fagg asked again about the possibility of using Bradford Memorial Library as a storm shelter.

"Have we looked into that?" he asked.

Llewellyn said the library had talked about it again.

"The concern when we brought it up the last time was there was no way really to secure the building and with the planned remodeling it becomes even more problematic so they really didn't have any interest in it," Llewellyn said.

Fagg said the lady he had talked to said they used to have 40 to 50 people go there. He was hoping to arrange something where the police, fire or a neighbor could open it.

"Are we just going to let the library say no we're not going to do it and let it go?" he asked. "I just think we ought to be opening up a public building in an area if it was used that much."

Badwey's concern was they needed to be consistent. He didn't want to open it up now, then not be able to during the remodel. He suggested getting the remodel done then revisiting it with them.

"I don't necessarily disagree it would be good to have a shelter on that side of town," Young added. "We need to be thoughtful if we are in severe weather or a disaster time, our city staff are going to be otherwise occupied and probably aren't gong to have the time to be a security guard for the books at the library. I would like for us to find a solution."

Llewellyn said that was right. If they did open it, it would be the city clerk or someone else from the office coming back to open it and not emergency personnel.

Fagg said if it was OK, he would go to their meeting and talk about it. He also said he heard what Badwey was saying.

"The problem with that is if the new design doesn't accommodate it," Llewellyn said. "If you wait, I think that when they remodel it will be less securable than it was before. I think it's more open. I don't think you can wait, Mayor. I think if this is something the commission feels strongly about I think there needs to be design changes."

Chapin said the biggest problem he saw was who would be the key holder.

Lake debt financing

On another topic, Fagg asked again to see the principal and interest breakdown on the lake debt, something he has asked for before.

Llewellyn said they did have it and went to check to see if he could get it, but it was not available because city staff had left for the day already.

Downtown stormwater concerns

Stormwater was the final topic Fagg brought up at the meeting.

He felt they needed a second opinion on storm water in the downtown area because he was afraid they would lose some businesses if they did not solve the flooding, specifically at the First and Main area.

"The question is how much do you want to spend," Llewellyn said.

When the city designs they do it on a probable year flood. In this case they designed for a five- to 10-year flood.

Scott Rickard, assistant city engineer, said they had two 25-year events and one pushing above that 25-year event in a short amount of time this summer. One rain dumped closed to three inches in 50 minutes.

Llewellyn said the question was what year event do they want to design to.

Fagg said he would like to get a second opinion from an engineering firm that specializes in storm water design.

Locke said there are possibly some other options that could help those businesses which they are looking into that would not require such a huge undertaking.

"I am also concerned," he said, "but a few ideas are bouncing around that would tackle that."

"The big thing is it's a policy issue," Llewellyn said. "How big of event do you want to design for?"

Rickard said they did have design work done on storm water, but he didn't recall what year flood for which it was designed.

"I think it is a big issue and a second opinion would not be a bag thing," Fagg said. "It's been a problem since I was a kid around here. Sometimes you can be too close to the issue. Scott does a good job."

Fagg asked the others to think about getting a second opinion which might offer some different ideas.

"I'm not an expert and Scott knows a whole lot more than I know," he said. "I'm just big on second opinions."

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